UBC Reports | Vol. 49 | No. 6 | Jun. 5, 2003

Drug Costs May Soar for Canada’s Seniors

Study urges major changes to pharmacare

By Hilary Thomson

Pharmacare -- it’s a national ailment sorely in need of a cure.

So says a group of health policy researchers at UBC’s Centre for Health Services and Policy Research (CHSPR).

They have recently completed a study that argues, without strong political leadership and comprehensive management of how medications are prescribed and used, government spending will escalate to the point where pharmacare for Canada’s seniors will soon be seriously threatened.

“Seniors’ drug benefit plans are under intense financial stress,” says co-investigator Steven Morgan, a CHSPR expert in health-care economics. “Until recently, provincial governments have provided generous drug coverage to virtually all seniors but changes such as user fees and eligibility requirements are seriously eroding that coverage.”

Morgan and Jonathan Agnew, postdoctoral fellows at the centre, along with CHSPR member Morris Barer, a Canadian Institutes of Health Research (CIHR) director, looked at provincial drug benefit programs for Canadian seniors, focusing on coverage, price control and how medications are prescribed and used.

The investigation found reduction of seniors’ drug benefits amid a “cost crisis” in the pharmaceutical sector. In the absence of effective cost-control, provincial drug plans for seniors are fast becoming unsustainable, the researchers say.

Canada spent almost $15 billion on prescription drugs in 2002, and the cost of public drug coverage programs in Canada has almost doubled since 1995, according to the Canadian Institute of Health Information.

Causes of increased drug costs include greater use of drug therapies and the type and quantity of drugs used to meet health needs. Despite the high cost of new drugs, there is often little evidence they deliver enough therapeutic value to justify their price relative to older “tried and true” medicines, Morgan says.

Drug prices must reflect therapeutic value and patients and doctors need to have sufficient information to balance the benefits of a drug against its cost.

“Without this type of decision-making, any system of prescription drug financing will be plagued by uncontrolled costs,” says Morgan, who is a CIHR fellow.

Part of the problem in containing costs is that provincial drug plans do not take full advantage of their purchasing power to negotiate discounted prices with drug manufacturers. There needs to be considerable political will, however, to confront drug manufacturers who often are major players in provincial economies, adds Morgan.

Low-income seniors remain well covered in all provinces, but it’s a different story for seniors with higher incomes, says Morgan. Since the mid-1990s, they have experienced reduced coverage because of co-payments, increased premiums, deductibles and eligibility requirements.

Some higher income seniors are likely to find part of their benefits shifted over to help young families pay for medication costs. B.C.’s recently announced Fair PharmaCare program uses a means test to determine how much seniors should pay for their medications. Much of those cost savings help to finance a universal plan for families with high drug costs relative to the family income.

The provincial government has asked the research team, in collaboration with researchers from the Harvard Medical School and the University of Victoria, to evaluate the provincial government’s PharmaCare program over the next three years.

For more information on the study, visit the Web site at www.chspr.ubc.ca.